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State of Louisiana DIVISION OF ADMINISTRATION Office of Statewide Reporting and Accounting Policy

M. J. "Mike" Foster, Jr. Governor

Mark C. Drennen Commisioner of Administration

March 14, 2000

MEMORANDUM SA 00-22

TO:  Fiscal Officers
All ISIS Agencies
FROM:  F. Howard Karlton CPA,
Director 
SUBJECT: 

Interagency Transfers

This memorandum addresses selected topics regarding interagency transfer processing in all subsystems of ISIS. Therefore, please ensure that affected contract, purchasing and fiscal staff receive a copy.

AGPS/CFMS INTERAGENCY TRANSFER ISSUES

It is the policy of the Division of Administration that agencies will use interagency transfers instead of issuing checks when paying another state agency. Our office has received numerous questions concerning the proper way to process an interagency transfer when making a payment through AGPS/CFMS. In order for all agencies to comply with this policy, seller agencies should follow these instructions:

1.   Each agency that has sold goods or services to other state agencies and received an AGPS Purchase Order or a CFMS contract number must establish an interagency vendor record. That vendor record should have a location code of SA under the agency FEIN on the VENC screen of AGPS. Several of you have already done so, attached is a list of those agencies that have established interagency transfer vendor location codes.

2. A default accounting distribution must be added by the seller agency to the AACG screen of AGPS for the classification of your revenue. Only one AACG record can be established for each three or six digit AGPS AGCY record per fiscal year. OSIS regenerates AACG records each fiscal year, based on the prior year entry, by the end of January. (See attached example)

3. Seller agencies must provide OSRAP with a screen-print of both the VENC and AACG screens. OSRAP needs this information to tie the vendor record and the accounting distribution records together using the "Pay To Agency" field on the AGPS VEND screen (See example). The vendor location code cannot process interagency transfer orders/contracts until we have added the agency number to VEND screen. If orders are added to the vendor location code before this step is completed, payments to this vendor location code will fail after we have completed this step.

4. The screen prints may be faxed to OSRAP, Attn: Vendor              Section at (504) 342-1053.

Only one seller accounting distribution may be tied to a vendor record in each fiscal year. If a seller agency has more than one selling unit within their agency with different revenue accounting distribution information, they will need to set up additional vendor records beginning with location code SB and continuing through SZ and additional AACG records. Selling agencies are responsible for keeping their AACG records updated with valid chart of account elements.

The new vendor records cannot be used when making payments on encumbrances already established to vendor records that were not set up in this manner. These vendor records have to have been entered on the Order or Contract entry screens (OFST, ORD4, KENT) before the encumbrance is sent to AFS. You cannot change the location code on OINV, OPAY, KENT or KINV to one of these location codes, if the order or contract was encumbered to a vendor record without an entry in the "Pay To Agency" field of VEND. Only those purchase orders and contracts that result in payment will be affected.

Conversely, do not request to have the agency number removed from VEND if agencies have orders set up to make interagency payments without informing the effected agencies. Those payments will fail because the system will be unable to locate the seller agency information.

Once these vendor records are established, the seller agency should inform all agencies that are seeking to establish AGPS purchase orders and CFMS contracts to use these vendor records on any new FY 00 and FY 01 documents. Purchasing agencies should look for and use these vendor location codes on purchase orders and contracts issued to other state agencies through AGPS/CFMS for FY 00 and FY 01 purchases. This includes all LEAF payments to the Division of Administration. Use of these vendor records in AGPS/CFMS will result in the creation and processing of a PV type 2 or 3 transaction when the payment record is accepted in AFS. No check number will be recorded in AGPS/CFMS. You may trace payments using BUNDL report 1G05 versions B (for buyers) and S (for Sellers) or OLGL.

If the buying agency cannot locate the selling agency vendor record on the vendor file after, please contact the OSRAP Help Desk at (504) 342-1097.

 

AFS INTERAGNCY TRANSFER ISSUES

Reclassifications of revenue to revenue or expenditure to expenditure between agencies should not be done on II or J4 transactions. The agencies should process J2 transactions which must be approved by OSRAP and the State Treasurer’s Office. Interagency documents are intended to record revenue to a seller agency and expenditure to a buyer agency which are different.

It has come to our attention that agencies are processing II and J4 transactions where the buyer and the seller agency are the same. Agencies should not do this unless they have received the specific written permission of the Office of Statewide Reporting and Accounting Policy (OSRAP). To obtain permission you must write a letter requesting authorization providing the details of the accounting process that you feel warrants this practice. OSRAP will periodically run InfoMaker reports to determine if agencies are continuing to process these transactions without authorization and will notify the Legislative Auditor of infractions. Processing documents of this type where both agencies are the same can result in the double counting of revenues and expenditures.

We have found that J4s and IIs are being used incorrectly within agencies for several variations of the following reasons:

Situation 1. Agency A has a federal grant to perform a service in unit 100. Unit 200 at the agency uses this service. Agency A expends funds in performing the service of unit 100 and collects federal revenue. Agency A creates a J4 or II using their IAT MOF as the seller and unit 200 (with themselves as the buyer agency). The same revenue was recognized in the federal and IAT appropriations and expenditures were recognized in both unit 100 and unit 200.

Situation 2. Agency B receives a grant from agency A to provide classes. The revenue is recognized as IAT when transferred. Agency B then buys materials and pays an instructor to present the class. The agency expends funds in the course of operations. In order to show that they have been reimbursed in the grant, they process a J4 to and from themselves to recognize revenue and expenditure in their grant reporting categories and a different MOF for tuition. The revenue is being counted twice with two different reporting categories in the agency, once in IAT and once in the other MOF appropriation. The expenditures are also double counted, once as all of the costs of presenting the class and once as tuition expense. The agency should process a J6 to reclassify the amounts to their reporting categories.

Situation 3. Agency C has a collection agency that collects on outstanding debts. The collection agency withholds a portion of collections as their fee and remits the balance to the state agency. Agency C has been processing IIs to recognize the collection fees as revenue and an expense. The proper way to recognize this is with a Manual Warrant (MW) transaction. One of the established uses of MWs is for recording transactions that occur outside of ISIS.

These practices should cease immediately. Overstatements of revenues and expenditures result in the Comprehensive Annual Financial Report (CAFR) containing misrepresentations. Further, this practice unnecessarily reduces the agency’s budget authority.

If you have any questions regarding the information in this memorandum, please contact the OSRAP Help Desk at (225) 342-1097.

FHK: rtj

Attachments

C: Ms. Susan Smith, OCR
        Ms. Denise Lea, OSP
        Ms. Alexis Thompson, OSIS
        Mr. Gary Hall, CPA, STO
        Mr. Dan Kyle, CPA, Legislative Auditor


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